KDIC to Allocate 10% of Deposit Insurance Fund in Dollars to Hedge Against Exchange Rate Fluctuations

The Korea Deposit Insurance Corporation (KDIC) has decided to allocate 10% of its total deposit insurance fund to dollar-denominated assets by 2027.

According to the KDIC and the financial sector on May 19, the KDIC plans to continuously increase its dollar assets for currency hedging purposes by purchasing U.S. Treasury bonds.

A KDIC official stated, "We are working on a plan to accumulate approximately 10% of the entire deposit insurance fund in dollars by 2027."

This decision was made as the scale of foreign currency deposits has grown due to factors such as the expansion of overseas stock investments and increased demand for dollar deposits, prompting the KDIC to revise its existing fund management approach, which had focused mainly on the Korean won.

In connection with this, it has been reported that as of the end of last month, the KDIC had purchased U.S. Treasury bonds worth 500 billion won.